Question

Help Save & Exit Submit Mogul Company ships merchandise to Ski Outfit in a consignment arrangement. The arrangement specifies that Ski Outfit will attempt to sell the merchandise, and in return, Mogul will pay to Ski Outfit a commission of 25% of the selling price on any merchandise sold. During the year, Mogul ships inventory with a cost of $99,000 to Ski Outfit and pays shipping costs of $21,300. By the end of the year, $79,000 of the merchandise has been sold to customers for a total of $104.000. Mogul allocates $15,500 of the shipping costs to inventory sold and the other $5,800 to inventory not sold. Mogul also paid advertising costs during the year of $19,500. What amount of inventory will Mogul report at year end? Multiple Choice $20,000 $25,800 $45,800. $65,300

Answer 1

Answer : Option B , $25,800

Explanation;  

Cost of Goods = $99,000 + $21,300 = $120,300 Cost of Goods Sold= $79,000+$15,500=$94,500 Inventory = $120,300 - $94,500 = $25,800